Lucky Core Industries to expand Ash production capacity

Lucky Core Industries Limited’s management held an analyst briefing session today. During the session, LCI’s management discussed FY24 results and offered valuable insights into the company’s forthcoming strategy. Here are the key highlights from the session.

Brief Takeaways

To recall, Lucky Core Industries Limited announced its 4QFY24 financial result, in which the company posted a profit after tax (PAT) of PKR 3.2bn (EPS: PKR 34.80), compared to LAT of PKR 4.4bn (LPS: PKR 47.6) during SPLY. This took the FY24 earnings to PKR 11.2bn (EPS: PKR 120.73), down by 37% YoY. The company also announced a cash dividend of PKR 33.0/share, taking the full-year dividend per share to PKR 60/share.
The company commands a 65% share of the local Soda Ash market, with a production capacity of about 560,000 tons. The total industry capacity is approximately 910,000 tons. Additionally, the company has expanded its capacity by 210,000 tons over the past five years.
The company exported over 150,000 tons of Soda Ash, but management reports that the profit margins from these exports are not very attractive.
A dense Ash production capacity of 70,000 tons is projected to be available by Oct’24, with a planned expansion of an additional 200,000 tons to be completed within 2-3 years. The expansion project is presently in the design phase and is expected to last one year, after which construction will commence.
The company has secured regulatory approvals for a greenfield veterinary medicine manufacturing facility with an estimated project cost of PKR 725mn. Construction has begun, and the facility is anticipated to be operational in FY26.
Management indicated that approximately 65% of the pharmaceutical portfolio comprises non-essential drugs. With the addition of the Pfizer portfolio, this non-essential component will increase by around 10%, as most Pfizer brands are non-essential. The Pfizer acquisition is expected to be finalized in Oct’24, with approval already granted by the Competition Commission of Pakistan.
In FY24, LCI’s pharmaceutical revenue was PKR 12.2bn, up by 33% compared to FY23’s PKR 9.16 bn. The margin improvement is attributed to a one-time price hike of 20% for non-essential drugs, reduced trade discounts, benefits from hardship cases and the partial impact of the deregulation of essential medicines.
During Apr-May’24, the company increased prices for non-essential drugs by around 18-20%. The complete effect of deregulation is expected to be realized in FY25.
Courtesy – AHL Research